Among the biggest winner in the restaurant industry in 2020 was Sonic Drive-Ins. Customers were itchy to get out of their house. But they did not want to eat inside a restaurant, for fear of COVID. And nothing bridged the two quite like the Oklahoma City-based chain, where you can dine out and enjoy yourself without stepping into a restaurant.
Customers flocked to the chain and its sales rose more than 21%.
Fast-forward to 2022, and the picture was much different. Customers were no longer worried about the pandemic after the omicron surge eased, and they flocked to dine-in restaurants. The result hit Sonic pretty hard. According to the latest Technomic Top 500 Chain Restaurant Report, the Inspire Brands-owned chain’s U.S. system sales declined 5.8%.
Considering that prices rose in the 8% range last year at most restaurants, the implication is that Sonic served about 13% fewer customers in 2022 than it did the year before.
“Sonic blew me away in 2020,” said Kevin Schimpf, director of industry research and insights for Technomic, a sister company of Restaurant Business. “It’s just coming back to earth.”
Sonic was hardly alone. Several pandemic darlings found life a little more difficult in 2022, largely riding high prices to mask weak traffic as customers took their business to other places.
Nowhere saw this shift quite like the pizza market and, in particular, the two biggest winners from that market: Domino’s and Papa Johns.
The four largest pizza chains’ combined system sales grew just 1% last year, implying a substantial decline in traffic based on 8% menu price growth over the course of the year.
Papa Johns’ U.S. system sales grew 16% in 2020. Those sales grew 2.3% last year. Yet that amount was tops among the four largest concepts.
Domino’s, which for years was among the industry’s strongest growers, grew sales by just 1.3% last year, the lowest level of growth for the Ann Arbor, Mich.-based chain since 2009. But all of that chain’s growth came from new units last year. The company’s unit count grew by 1.9% last year. The average Domino’s generated a lot less sales.
Little Caesars and Pizza Hut each had more unique circumstances. Both chains did not get the full benefit of the surge in pizza sales in 2020 because they relied more heavily on other types of business.
Little Caesars was a huge carryout brand that only recently began offering delivery, albeit through third-party services. Its system sales grew just 4.3% in 2020, as carryout was not as strong as delivery was that year. But its sales still slowed in 2022, with just 1.6% growth.
Pizza Hut is even more interesting and, in some respects, did far better last year than it did in 2020. The Plano, Tex.-based pizza chain has traditionally relied on dine-in restaurants for much of its sales. But the bankruptcy filing of its largest operator, and closure of some 300 such stores, hurt sales in 2020—they declined 2.2% that year despite strong performance by its delivery and carryout locations.
Yet even as that delivery business took over in 2022, its sales declined. Pizza Hut’s system sales declined 0.4% in 2022, improved performance but still an indication that fewer customers ordered its pizzas last year.
“I don’t think that’s particularly concerning,” Schimpf said. “It’s normalization. They did well during the pandemic and in 2021. But they’re now coming back to earth. They’re not the only game in town anymore.”
Bone-in chicken was another winner. During the pandemic, customers ordered chicken by the bucketful for dinner as a meal replacement.
KFC, whose sales grew 4.3% in 2020, watched that slow to 0.2% last year. But a more dramatic shift happened at Popeyes. That chain’s sales surged 20.3% in 2020. It grew 4.7% in 2022, a slowdown to be sure. Much like Domino’s, however, that all came from expansion—its unit count grew 6.1% last year.
There were certainly a few exceptions. Boneless chicken chains that did well in 2020 continued to do well in 2022, such as Raising Cane’s (sales up 31% in 2022) and Chick-fil-A (up 12.8%). And sales grew 16.8% at Wingstop in 2022. That was a slowdown from the 31% growth it enjoyed in 2020 but we doubt anyone at the company is disappointed at that result.